Zillow is an operator of the biggest real estate web site in the United States. It has agreed to buy StreetEasy for $50 million in cash. The deal would make it possible for Zillow to expand its coverage of the New York market.
StreetEasy has around 1.2 million unique users, who are residential real estate shoppers in the New York area. Zillow has around 61 unique visitors at the end of July. The company has announced a secondary stock offering.
Zillow has faced stiff competition from Trulia Inc. and other real estate listing web sites as housing market in the United States experience a recovery. In order to maintain its edge in the market, Zillow has been acquiring smaller firms.
Chief Executive Officer Spencer Rascoff said that buying StreetEasy can help Zillow expand its presence in New York, which is the largest market in the United States. Zillow will use StreetEasy’s sales team to improve advertising and subscription revenue faster than StreetEasy.
In December, Zillow purchased HotPads for $16 million in cash. The company said it would use the proceeds from its share offering to make deals that enhances its business. Zillow sahres dropped 7.1 percent to $84.74 to close the trading session in New York. So far in 2013, the stock has more than tripled its value.
StreetEasy was founded in 2006 and has 34 workers. It offers for-sale and for-rent listings via partnerships with the biggest brokerages in New York. The deal with Zillow is expected to be completed in the next couple of weeks. Zillow’s 20 workers in New York will move into the office of StreetEasy.
Most of the workers of StreetEasy are equity holders in the company. This was according to Zillow spokeswoman Dawn Lyon. StreetEasy had around $2.9 million of venture capital backing from FA Technology Ventures, an investment firm.